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Stop Trading!: The Market's New Leadership?

There’s a tug of war going on in the market, Cramer said during Thursday’s Stop Trading!, between a major oil company and the ailing banks.

Exxon Mobil , despite being downgraded twice, is up today, and the stock’s trying to take the Dow along for the ride. But fears of nationalized banks, such as Citigroup and Bank of America, and a struggling General Motors are pulling the index back down.

If Exxon can break up to $75, where there’s a lot of $75 put selling, Cramer said, “then I think that you will see some upside.” The stock is presently trading at $72 and change. He also thinks Exxon’s resistance today is a sign that oil’s done going down, and that many stocks in the sector are worth consideration.

“The oil bears are going to have to put up or shut up soon,” Cramer said. “And I think they’re going to be shut up.”

The oil stocks may even offer the market much-needed leadership right now, he said, albeit meager.

The problem, though, is that “there is no floor” for the banks’ share prices – not without a solution from Washington. And continued problems in that industry, and in the insurers, are putting too much pressure on the markets.

“You can’t rally with financials going down like this,” Cramer said.

Elsewhere in the market, Visa and Mastercard are buyable stocks on the coming adjustment in the Dow Jones Industrial Average. The Dow is expected to change its constituent list, and there’s speculation that a bank like Citi or BofA would be pulled in favor of a better financial. Visa and Mastercard’s businesses depend on transaction volume, so there’s no credit risk. That’s why a lot of mutual funds, which are required to have a certain weighting of financials, are already starting to move into these stocks.

Goldman Sachs and Morgan Stanley, both free of mortgage exposure, could also replace a present Dow name.

“We could wake up and the Dow will suddenly start going up because it doesn’t have these dead weights,” Cramer said of Citi and Bank of America, and even General Motors.

Visa, he continued, has an “upward bias,” so its addition to the Dow could be very positive.





Cramer's charitable trust owns Goldman Sachs and Morgan Stanley.

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